After the release of their debut album in February 1970, Black Sabbath returned to the studio in June that year, again with producer Rodger Bain, to record their second album. The album was recorded at Regent Sound Studios and Island Studios in London, England. The album's eponymous single "Paranoid" was written in the studio at the last minute to fulfill the record label's request for a single.

As drummer Bill Ward explains: "We didn't have enough songs for the album, and Tony just played the "Paranoid" guitar lick and that was it. It took twenty, twenty-five minutes from top to bottom."

The song "Iron Man" was originally entitled "Iron Bloke". Upon hearing the main guitar riff for the first time, Ozzy Osbourne remarked that it sounded "like a big iron bloke walking around". The title was later changed to "Iron Man".

The album was originally titled War Pigs, but allegedly the record company changed it to Paranoid, fearing backlash from supporters of the ongoing Vietnam War. At the time, the band felt that the song was lighter, with the potential to become a single. Additionaly the band's label felt the title track was more marketable as a single. However, the band's visual interpretation of a "war pig" was still featured on the cover; a distorted, eerie photograph of a bearded man with a sword and shield jumping out from behind a tree.

The original UK vinyl release was in a gatefold sleeve. The inner of the gatefold had a black and white photo of the band, posed outdoors on a grassy hill, and was their first appearance on album artwork. To spread the original picture over the gatefold, Ozzy Osbourne was separated from the other members of the band and a section of the grass was copied and dropped into the gap. This is only readily apparent if one compares it with the original photograph.

In the decades succeeding its initial distribution, Paranoid has been regarded by many as Black Sabbath's best album, and by some the best heavy metal album of all time[1]. The "Paranoid" single, released before the album, reached number four in the UK. Pushed by its success, the album hit number one in the UK, and is the only Black Sabbath album to have done so.

The US release was held until January 1971, as the Black Sabbath album was still on the charts at the time of Paranoid's UK release. The album broke into the top twenty in the US in March 1971, and would go on to sell four million copies in the US alone. Paranoid's chart success in the US allowed the band to tour there for the first time in December 1970. This spawned the release of the album's second single "Iron Man", and although it failed to reach the top 40, "Iron Man" remains one of Black Sabbath's most popular songs. In addition, it is considered to be Vertigo's breakthrough release.